Vishal Sikka, CEO of Infosys, has often justified his acquisition strategy by saying that tomorrow’s technologies aren’t cheap. But even as the controversy around the price that Infosys paid for Israeli automation specialist Panaya refuses to die down, the chief executive of rival firm Tech Mahindra told Moneycontrol that his company has developed a similar technology in-house, and inexpensively.
In an exclusive interview, CP Gurnani said: "The automation platform he [Sikka] bought in Israel – and not going into the board controversy – my team developed a similar automation technology that is being used and I think they got it right and they got it cheap because they self-developed it, whereas Mr Sikka went and bought it."
Also read: Gurnani on IT and future strategy
Infosys acquired Panaya in 2015 for USD 200 million and since then much ink has been spilled on the deal and its fair price, especially with whistle-blowers questioning the price the company paid for the Israeli company and suggesting that the deal did not have CFO Rajiv Bansal’s blessings.
Acquisitions are not easy for reasons more than one. But Tech Mahindra has followed an inorganic growth strategy, which began with the acquisition of Satyam in 2009. Elaborating on acquiring tomorrow’s technologies, Gurnani said: “I agree that tomorrow’s technologies have an element of risk and mystique around it. If you look at Pininfarina and BIO, they were not cheap."
Also read: Gurnani on business models, and growth
Different markets call for different strategies. Gurnani doesn’t hesitate to say that “in principle I agree that one man’s poison is another man’s food. In principle, I agree that if you are a lot futuristic, you would have heard of acquisitions where the revenue [of the acquired company] is USD 50 million but they have been sold for USD 1 billion. VMware bought a company in software virtualization for networks at a billion plus dollars. It was not a revenue play but it was about VMware taking a bigger bet on some of the platforms. You saw Intel bought McAfee. Digital security assets are expensive."